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Selling stampede shuts down Tokyo stock
(Reuters)
Updated: 2006-01-18 17:29 The number of transactions had reached about 4 million by 0525 GMT (2:25
p.m.), just before trade was halted.
Individual Investors, Reform Worries
News that the exchange was considering a shut-down accelerated selling across
the board, pushing down the Nikkei share average by more than four percent to as
low as 15,059.52.
The Nikkei clawed back to finish down 2.94 percent at 15,341.18 but that was
still its biggest one-day fall since April 18, 2005, when it fell 3.8 percent.
The broader TOPIX index fell 3.49 percent to close at 1,574.67.
Weaker-than-expected earnings by U.S. chipmaker Intel Corp. also weighed on
the market.
The share-price tumble also hit the yen, which fell to a day's low of 115.88
yen to the dollar, before recovering to around 115.60.
"The problem has caused a selling climax. Everyone is throwing in sell
orders, said Ken Masuda, a senior dealer at Shinko Securities shortly before
trade was halted.
"Even after five minutes, orders aren't going through. This is ridiculous."
Investigators from the Tokyo District Prosecutors' office and the Securities
and Exchange Surveillance Commission raided the Tokyo headquarters of Livedoor
late on Monday on suspicion that the company had spread false information to
investors.
Newspaper reports on Wednesday said the company was also suspected of
tampering with its financial reports.
The investigation has scared off individual investors, who were a major
factor in the Nikkei's 40 percent rise last year. Only last Friday, the Nikkei
hit a five-year closing high.
Individual investors now account for about 40 percent of all trades on the
Tokyo, Osaka and Nagoya stock exchanges, up from 30 percent last year.
The Livedoor affair also cast a cloud over the aggressive acquisition
strategy and money deals practiced by the firm's maverick CEO, Takafumi Horie,
and sparked some concern about damage to Prime Minister Junichiro Koizumi's
reform agenda.
Horie, 33, ran unsuccessfully for parliament's lower house as a ruling party
candidate last September and Koizumi's right-hand man on economic reforms,
Internal Affairs Minister Heizo Takenaka, campaigned for him.
Analysts and some investors themselves said, however, that individuals would
resume buying once the Livedoor fuss settled down, given Japan's recovering
economy and corporate earnings.
"The past two days have been a warning to the market that things have gone
too far and that things have started to look like a bubble," said Masayasu
Higuchi, 77, who works for a fishing equipment maker, after selling some shares
at a packed day-trading center in the Kayabacho, Tokyo's Wall Street.
"I will wait for the market to settle and when the time is right I want to
invest again," he added.
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